Quote: Originally Posted by Tonington
But the fund is for innovation. This isn't a subsidy to build more of the same cars. As an example of innovative technology, how would you rate electric vehicles on the return they have delivered thus far? I'm one of few on here that would probably say this is a good technology worth developing, but I wouldn't use targetted subsidies like this. I would prefer indirect subsidies like tax credits, not a gift of cash, and then the market still gets to choose which of the disruptive technologies, if any at all, survive. They would still have to sell these new cars to get the tax credits...
And if we go down the road talking about well paying jobs lost and the infrastructure in place, we're right back to what Coyne said, it's not an economic argument. That would mean we acknowledge that the industry cannot survive on it's own, thus tax payer gifts amount to giving money to an economic loser as already picked by the market. If they cannot innovate and keep up with the current market trends, then why should we throw money to a contracting industry instead of improving conditions that allow smaller companies to grow?
It's not justified economically. It is politically...
Sorry for the confusion, I was speaking just as a direct comparison of an established product, even an innovative one, to a completely new technology. Building a better mousetrap, as innovative as it might be (bigger, stronger, faster) we know what the benefit is to the end user. We can only guess with truly new technologies and products.
I do prefer a more open indirect subsidy like the tax credit as you've said, because ultimately the market does control where the money goes. It's fair, it's impartial, it's based on the benefit to the consumer/end user as they have so determined it be. I'd like to see less direct government involvement for the most part, not more, in business and industry.
Having said that I don't have a problem with earmarking some
federal funds for a direct capital investment in any innovation. But I do think the criteria for such an investment should be completely impartial and open to both new and established sectors alike. The stimulus subsidies that went into the automotive sector were, at the time, necessary because having them all fail at once would have been catastrophic. But using that rationale to continue to subsidize the same industry through innovation subsidies is wrong. How long can that possibly go on?
In short, I agree with you.